The cryptocurrency exchange known as Uphold has disputed that it is responsible for paying around $784 million to the liquidation trust established by the defunct cryptocurrency investment platform Cred.
On January 11, 2019, after a hearing in the court, Uphold submitted a move to dismiss all charges of the lawsuit that Cred had lodged against the company back in June.
Cred was a cryptocurrency loan firm that initiated bankruptcy proceedings under Chapter 11 in November of 2020.
In June, Cred’s liquidation trust initiated legal action against Uphold and two of its affiliates by submitting an adversary lawsuit.
It was said that Uphold had collaborated with Cred co-founders to promote CredEarn and that the company owed the cryptocurrency lender $783.9 million.
The complaint states that Cred said that Uphold collaborated with Cred’s co-founders to promote CredEarn, and that Cred asserted that crypto investments routed from Uphold at the time of the market top would have been valued in excess of $700 million.
Retail investors were drawn in by the product’s promise of large payouts; nevertheless, Cred’s investments went bad, which resulted in consumer losses and ultimately led to the company filing for bankruptcy in November of 2020.
The circumstances behind Cred’s bankruptcy are very similar to those surrounding Celsius Network and Voyager Digital.
However, in its move to dismiss the lawsuit, Uphold characterized Cred trust’s claims against it illogical, conclusory, and conspiratorial, and it urged the Delaware bankruptcy court to reject them. Cred trust had accused Uphold of being involved in a conspiracy.
Uphold refuted the claims that it was aware of the hazards at Cred and said that Cred was owned and managed wholly separately from Uphold. Additionally, it said that it was uninformed of the financial difficulties that CredEarn was experiencing at the time that it advertised the product to Uphold clients.
At the hearing, the counsel for the Cred trust, Joseph B. Evans of McDermott Will & Emery, said that allegations against the insiders relating their participation with Uphold had been addressed independently. These claims were to the insiders’ work with the company.